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| (Photo
by Michael Goodman for ENR) |
School construction,
spurred on by a surge in student enrollments, has been one
of the industry’s strongest markets over the last decade.
While state fiscal problems are expected to slow the double-digit
growth of recent years, the underlaying demographics will
keep the school building market going strong for years to
come.
Over the next 10 years, enrollment
in K-12 schools is expected to increase an average of 5% a
year, says Richard Branch, an economist who tracks the school
market for McGraw-Hill Construction Analytics, Lexington,
Mass. While this is down from the 20% annual increase in K-12
enrollment during the previous decade, it will be enough to
keep the market near peak levels.
Although pressure from enrollment
at the elementary school level is expected to ease, an increase
in college-bound students will keep construction buzzing.
College enrollment is projected to increase 19% a year through
2013, up from a 10% average over the previous 10 years, says
Branch.
Through the first 11 months of
last year, total school construction put-in-place reached
$66.2 billion, according to the U.S. Dept. of Commerce. This
is 1.3% more than the same period in 2002 when school construction
hit a record high after growing about 12% a year since 1999.
Public schools make up 82% of the market and private schools
18%, according to Commerce.
McGraw-Hill Construction expects
the dollar value of contract awards for new school construction
that it tracks to post another 3% gain in 2003 before flattening
out this year, says Branch. However, he notes that a mild
slowdown in the square footage being built already has started.
McGraw-Hill Construction estimates that the total school market
slipped 5% in 2003 to 239 million sq ft and it predicts that
the school market’s size will shrink another 12 million
sq ft in 2004.
"Virtually all of this decline
can be tied to the fiscal budget crisis facing many states,"
says Branch. But partially offsetting the impact of state
budget woes has been a strong bond market for school construction,
he adds.
The school market also is very
regional, with the strongest growth moving to the South and
West as other regions have subsided. For example, the Northeast
in 1967 accounted for 24% of the school construction market
and the West 16%, according to McGraw-Hill Construction. By
1982, the Northeast’s share of the national market fell
to just 9% while the West grew to 23%.
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